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Why Indonesia's Energy Transition Hinges on Its Banks
Why Indonesia's Energy Transition Hinges on Its Banks.
Inside the First Green Sukuk: Lessons Three Years On
Inside the First Green Sukuk: Lessons Three Years On. Analysis and commentary on the policies, people, and markets shaping sustainable finance in Indonesia.
Overview
This guide brings together practical guidance for embedding sustainable finance into everyday lending and investment decisions. Core terms such as financed emissions are defined as you go, and each recommendation is grounded in the current Sustainable Finance Taxonomy (opens in a new window).
The approach is built around a few core principles:
- Treat climate and nature-related risk as core to credit decisions, not a reporting afterthought.
- Use comparable, verifiable data wherever a judgement call would otherwise be made.
- Align every financing decision with a credible, time-bound transition pathway.
Putting it into practice follows three broad steps:
- Baseline the portfolio's financed emissions against a recognised methodology.
- Set sector-level targets and the lending policies needed to meet them.
- Report progress each year and adjust as the underlying data improves.
The transition will be financed by the institutions that can see their risks most clearly. Those that treat climate and nature as core credit factors, rather than reputational extras, will be the ones still lending profitably a decade from now.
Key figures at a glance
| Indicator | 2022 | 2023 | 2024 |
|---|---|---|---|
| Green lending (USD bn) | 0.8 | 1.2 | 2.4 |
| Sustainability-linked loans (USD bn) | 0.5 | 1.1 | 1.9 |
| Financed emissions (MtCO₂e) | 9.4 | 8.6 | 7.1 |
| Clients with transition plans | 18 | 34 | 57 |
| Institutions reporting | 8 | 12 | 30 |
Common questions
A few points that come up often when teams first put this into practice:
Financed emissions follow the PCAF standard, attributing a share of each borrower's or investee's emissions to the financing provided.
Where primary data is unavailable, sector averages are used and clearly flagged as estimates so the gaps stay visible.
Explore the data
Disclosure is not the destination; it is the starting line. The value comes from what institutions do once they can finally see where their emissions and their risks actually sit.
Use this guidance alongside the resources linked throughout, and adapt each step to your institution's own portfolio, clients, and risk appetite.
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Read more analysis and commentary on sustainable finance in Indonesia.
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In Conversation with a Chief Sustainability Officer
In Conversation with a Chief Sustainability Officer.
